We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in March 2023.

The Strategy¹ delivered a return of 4.60% during the month, outperforming the benchmark MSCI All Country World Index return of 3.86%. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over one month, five and 10 years, and since inception. 

Notes: 1. WQG, WCMQ and WCM Quality Global Growth Fund (Managed Fund) have the same Portfolio Managers and investment team, the same investment principles, philosophy, strategy and execution of approach as those used for the WCM Quality Global Growth Strategy however, it should be noted that due to certain factors including, but not limited to, differences in cash flows, management and performance fees, expenses, performance calculation methods, and portfolio sizes and composition, there may be variances between the investment returns demonstrated by each of these portfolios and the WCM Quality Global Growth Strategy Composite (the Composite) in the future. As WQG, WCMQ and WCM Quality Global Growth Fund (Managed Fund) have only been in operation for a relatively short period of time, this table makes reference to the Composite to provide a better understanding of how the team has managed this strategy over a longer period. Performance is net of fees and includes the reinvestment of dividends and income. 2. Composite inception date is 31 March 2008. 3. Benchmark refers to the MSCI All Country World Index (with gross dividends reinvested reported in Australian Dollars and unhedged). 4. Value Added equals Composite Performance minus Benchmark performance. 5. Annualised.

The Strategy is conveniently available via four investment structures to accommodate the differing preferences of individual investors. You can find the monthly investment update under ‘More Information’ for each of these products on the links below:

• WCM Global Growth Limited (ASX:WQG)
• WCM Quality Global Growth Fund (Quoted Managed Fund) (ASX:WCMQ)
• WCM Quality Global Growth Fund (Managed Fund) (Unhedged)
• WCM Quality Global Growth Fund (Managed Fund) (Hedged)

Strategy Update

Global equity markets moved higher in March despite the month being marred by both a major bank failure and state-backed banking merger. The collapse of Silicon Valley Bank, closely followed by the merger of Credit Suisse and UBS caused temporary short-term panic in markets. However, by month end, this fear was replaced by optimism that these events may act as a catalyst for central banks potentially to halt the pace and scale of future interest rate increases. US inflation data again pointed to a declining trend with the consumer price index gaining 6.0% in February, compared with the peak level of 9.1% in June 2022. The absolute level, however, remains considerably above the US Federal Reserve’s target rate of 2.0%. Inflation numbers in Europe also showed a declining trend, although this positive news was partially tempered by concerns over potential contagion effects from the Credit Suisse crisis and the impact of civil disturbance from strikes in France and the UK. At a sector level, Information Technology and Communication Services led markets higher during the month. The US market’s relatively high allocation to these sectors contributed to it being amongst the best performers at an individual country level. The Financial sector, for the reasons described earlier, and Energy were two of the larger sectors posting declines for the month. Factor performance was mixed, with one noticeable feature being the outperformance of large versus small capitalisation stocks. The Australian dollar declined marginally in March, enhancing returns for unhedged portfolios.

Stock selection was the primary driver of portfolio outperformance during the month. This was most evident in the Financials, Health Care and Consumer Discretionary sleeves of the portfolio. Sectors where stock selection detracted from relative performance included Information Technology and Materials. From a sector selection perspective, the zero exposure to Energy and Real Estate and overweight exposure to Health Care were the largest positive contributors. On the flipside, the above benchmark positions in Financials and Industrials and the absence of any exposure to Communication stocks detracted from relative returns.

The March quarter was a positive one for the Quality Global Growth Strategy in terms of both absolute and relative returns, delivering a strong return of 10.92% compared with the Benchmark return of 8.79%. Lower trending inflation and the decline in long-term interest rates provided a positive tailwind for growth-style investing. As evidence of investing often being as much about what you don’t own as you what you do, the Strategy also benefited from the zero exposure to Energy stocks, the worst performing sector over the quarter. This contrasts to the experience of 2022 when Energy topped the sector performance tables. There was one new position added to the portfolio during the quarter, UK pharmaceutical group Astra Zeneca.